Latest Edition of Mitchell's Industry Trends Report Shows Relationship Between Fuel Price Spikes and Total Losses - BodyShop Business
Connect with us

Uncategorized

Close Sidebar Panel Open Sidebar Panel

Uncategorized

Latest Edition of Mitchell’s Industry Trends Report Shows Relationship Between Fuel Price Spikes and Total Losses

Advertisement

Mitchell International, Inc., a leading provider of technology, connectivity and information solutions to the property and casualty claims and collision repair industries, today released the third quarter 2011 edition of its Industry Trends Report (ITR) – the company’s quarterly publication that highlights industry-related trends, news items and statistics.

Click Here to Read More
Advertisement

In this ITR, Mitchell’s quarterly feature discusses how volatile and sustained high fuel prices are impacting insurance claims – beyond a reduction in miles driven. Specifically, the article discusses how this phenomenon, along with market reaction time, or the delay between the rise in fuel prices and the rise in value of the most fuel efficient vehicle, is affecting total loss values.
 
This edition’s quarterly feature, "Timing is Everything: Total Loss Values and Gas Prices," by Mitchell’s Vice President of Industry Relations Greg Horn, delves into Mitchell’s Total Loss Valuation Data Warehouse to explain how rapid changes to the price of gasoline this year are impacting resale values for fuel efficient cars, hybrids and – at the other end of the spectrum – gas guzzlers differently.
 
"To determine the relationship between fuel price spikes and values, we examined the Toyota Corolla, Prius and the Ford Expedition as representatives of the fuel efficient, hybrid and gas guzzler vehicle categories," said Horn. "Our claims data fell in line with other reports and market sources and did show that fuel efficient vehicles tend to rise more quickly and reliably in value during periods of high prices than gas guzzlers, which fall in value."
 
Horn added, "Significantly, our analysis showed a market reaction time during fuel price volatility of approximately three weeks – a delay between the rise in fuel prices and the rise in value of the most fuel efficient vehicle in our study, which was a hybrid. Gas guzzlers, which are traditionally more volatile during fuel price fluctuations, showed a similar lag pattern. The insurance and collision repair industries need the accuracy of a true market survey method for valuing a total loss because constantly fluctuating fuel prices move too fast, with too great an impact, for slower traditional ‘book value’ valuations to accurately reflect the true actual cash value of total loss vehicles."
 
Other valuable points of interest in the current issue of Mitchell’s ITR include:

Advertisement

• Mitchell’s Q2-2011 data reflect an initial average gross collision appraisal value of $2,761 – $90 less than this same period last year. However, applying the indicated development factor of 9 percent suggests a final Q2-2011 average gross collision appraisal value of $3,008. The average Actual Cash Value (ACV) of vehicles appraised for collision losses during Q2-2011 was $13,705 – an increase of $500 over the same period last year.

• In Q2-2011, the average gross appraisal value for comprehensive coverage estimates processed through Mitchell servers was $2,854 – compared to $2,625 in Q2-2010. Applying the prescribed development factor of 1 percent for this data set produces an increase in the adjusted value to $2,883 – reflecting the strong storm season with many hail claims. 

Advertisement
Advertisement
Click to comment
Connect
BodyShop Business